Sunday, February 07, 2016

Here's another one. What would you rather give up: smartphones, or plumbing?

They're questions that go to the heart of the myth at the centre of Malcolm Turnbull's Australia Day speech – that we live in "the most exciting time in human history".

According to our technologically-savvy Prime Minister "there has never been such rapid change".

Really? Try telling that to your great-grandparents.

In the late 1800s families bathed in tubs in the kitchen, often the only heated room in the house, after carrying in buckets of cold water and heating it by an open fire. They washed once a week if they were lucky, and in some cases once a month. Yet within decades, by 1940, they had running water and heating in every room. So says US economist Robert J. Gordon in an impressive, and somewhat depressing, new tome entitled The Rise and Fall of American Growth.

Gordon says not a single urban home was wired for electricity in 1880, but by 1940 nearly 100 per cent had mains power. By 1940 94 per cent had clean piped water, 80 per cent had flush toilets, 73 percent had gas for cooking and 56 per cent had refrigerators.

Houses went from being isolated to being networked, "most having the five connections of electricity, gas, telephone, water, and sewer".

Compare that to the changes we are living through now, the ones spruiked by our Prime Minister.

Gordon says until 1970 progress was broad, encompassing electricity, the internal combustion engine, health and networking. Since then it's been mainly in entertainment and communications. And its been evolutionary rather than revolutionary.

By 1970 television was old. Even our family had one. Since then we have had a move to colour (something that happened earlier in the US) and a move to both larger and smaller screens. By 1970 telephones were ubiquitous. That's when my family signed up. Since then they've become more portable, but they function in the same way. Computers are improved typewriters, email functions as a fax machine, and the internet as an encyclopaedia.

And away from communications, progress has been glacial...

"By 1970 the kitchen was fully equipped with large and small electric appliances, and the microwave oven was the only post-1970 home appliance to have a significant impact," Gordon writes. "Motor vehicles accomplish the same basic role as they did in 1970, albeit with greater convenience and safety. Air travel today is even less comfortable than it was in 1970, with seating configurations becoming ever tighter and long security lines making the departure process more time-consuming and stressful."

His graphs are shocking. They are rainbow-shaped. They show that in the 50 years before 1920 output per person grew at an annual rate of 1.8 per cent. For one glorious half-century between 1920 and 1970 it grew at 2.4 per cent, then it fell back to 1.8 per cent where it has been for the past half-century. The graph on effort is U-shaped. Before 1920 working hours per person rose. Between 1920 and 1970 they fell rapidly, and now they are climbing again, more quickly than they did before the glorious half century began.

It's as if the promised future didn't happen. Peter Thiel, the founder of PayPal, put it this way: We wanted flying cars, instead we got 140 characters".

There's a counter argument, one I find intuitively attractive. It's that new developments feed on other new developments to create game-changing transformations such as the driverless car or 3D printing. But they are not showing up in the figures. The US economist Robert Solow famously quipped in the late 1980s that he could see the computer age everywhere but in the productivity statistics. He was briefly wrong – productivity growth did climb for a few years, but then it fell back down. Moore's Law – the rule of thumb that said processing power would double every two years – has been failing to keep pace for a decade. In recent times it has taken four to six years for processing power to double.

Gordon's point is that should neither surprise nor worry us. Humanity's big advances were awesome. Whereas as all of us could quite happily travel back in time 50 years from today and enjoy a recognisable lifestyle, that wouldn't have been possible if we travelled back 50 years from the 1940s.

But those advances have already happened. They can't happen again. They made us better off, forever. We're living in that forever.